About a-team Marketing Services
The leading knowledge platform for the financial technology industry
The leading knowledge platform for the financial technology industry

A-Team Insight Blogs

More Ratings Regulations Progress in US with House Financial Services Committee Vote

Subscribe to our newsletter

This week more progress has been achieved in the US with regards to the regulatory crackdown on credit ratings agencies: the House Financial Services Committee has thrown its support behind the bill to increase oversight of this corner of the market. The bill, which was first proposed by Paul Kanjorski, chairman of the House subcommittee on capital markets, goes one step further than the Obama administration’s proposed reforms for the sector by making these agencies collectively liable for inaccuracies in their ratings.

The aim of the new regulation is to try to reduce the conflicts of interests at ratings firms and make it easier to sue them when they provide investors with inaccurate findings. It would require these agencies to be liable under securities law for inaccuracies in their ratings, which would mean that they would be regulated as “experts” under securities law, in the same way as auditors, who can currently be more easily sued over their findings.

The bill would also require these firms to provide more information to the market about how they have been paid for their ratings services and would grant the Securities and Exchange Commission (SEC) more power to oversee their practices. Moreover, the ratings firms would need to appoint more independent members to their boards of directors in order to reduce the chances of conflicts of interests occurring.

The support of the House committee brings the proposals one step further to enactment, but they still have a long way to go as the Senate is moving on a far slower schedule than the House.

Unsurprisingly, the ratings agencies are not keen to face a potential barrage of lawsuits and have been vigorously lobbying for these proposals to be dropped. They have employed the tactic of suggesting that this development would push up costs for end investors for their services in the long run.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Adding value and improving efficiencies in sanctions screening

Sanctions have been headline news this year. They are growing in number, sanctions lists are changing on a daily basis, and there can be conflict between sanctions issued by different jurisdictions – the whole calling for financial institutions to optimise sanctions screening to reduce risk and avoid potentially punitive penalties of non-compliance. This webinar will...

BLOG

SmartStream Combines Air, RDU to Offer Comprehensive Transaction Reporting for MiFID II

SmartStream Technologies has combined its SmartStream RDU reference data utility with its SmartStream Air (Artificial Intelligence Reconciliations) solution to create a new offering that provides regulated entities with comprehensive reporting capabilities for MiFID II. The new solution – Transaction Reporting Reconciliation and Reporting Decision Control – aims to address regulators’ growing requirement for completeness and accuracy...

EVENT

TradingTech Summit London

Now in its 11th year the TradingTech Summit London brings together the European trading technology capital markets industry, to explore how trading firms are innovating in today’s cloud and digital based environment to create flexible, scalable trading platforms to support speed to market and business agility.

GUIDE

ESG Data Handbook 2022

The ESG landscape is changing faster than anyone could have imagined even five years ago. With tens of trillions of dollars expected to have been committed to sustainable assets by the end of the decade, it’s never been more important for financial institutions of all sizes to stay abreast of changes in the ESG data...